Taxation of AVCs

[Johnboy45]

Query on taxation of lump sum on Redundancy and AVC’s.
If someone takes Redundancy at 60yrs (with 30yrs service), their Pension is deferred until they reach 65. They have 200k in AVC’s account. How does the Redundancy payment affect Taxation of the AVC lump sum.

 

[LDFerguson]

If they are receiving a redundancy lump sum now that is greater than statutory redundancy, they may be given the option to waive their entitlement to a tax-free lump sum at retirement, in return for having more of their redundancy lump sum paid tax-free now. Or they can choose to pay normal tax on the redundancy lump sum now and there will be no effect on their retirement lump sum at 65.

If they are being offered this choice they should be shown the facts and figures relating to either choice. I would suggest that they should take professional tax advice in evaluating the two, before making the decision.